“Peter writes: ‘Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?’ No! No! No! Bear Stearns is fine! Do not take your money out. … Bear Stearns is not in trouble. I mean, if anything they’re more likely to be taken over. Don’t move your money from Bear! That’s just being silly! Don’t be silly!” —Jim Cramer, responding to a viewer’s e-mail on CNBC’s Mad Money, March 11, 2008

Well, we have another entry, this time on the size of the monetary base in the U.S.:

Despite the sense of deflation that we currently feel, this implies that, unless the Fed can manage to turn fiscal policy on a dime, the hyperinflationary iceman cometh. Even if the Fed perfectly times the policy turnaround, it's unclear from a technical perspective how exactly it can pull all these dollars back out of circulation. (For more detailed analysis, see here.)

If you believe this, here's what it implies at a personal level: get your hands on real assets, e.g. property and commodities (canned goods and bullets?), ideally by leveraging up on unindexed dollar-denominated debt (which will soon be meaningless). Securing large amounts of debt is of course very hard to do right now, since banks are refusing to lend -- which is exactly what the Fed's monetary policy is trying to address -- but you can do this in modest ways by buying a car on credit, for example. But the key point is this: the real, tangible assets you possess (goods and skills) are likely to be the only thing you've got in a few years. So get as many of these as you can.

Thinking about this less personally, one has to figure that the coming orgy of inflation will be socially catastrophic. We know from the historical record what hyperinflation does to a country. Anyone on an fixed income is hosed (hello, AARP!). Anyone holding unindexed dollar denomination paper is hosed (hello, Beijing!). Government spending nolens volens must be radically curtailed (hello, Obama!). As the middle class evaporates, barter and scavenging rapidly emerge as crucial forms of economic exchange.

Finally, the political implications of all this. Since massive cuts to U.S. government programs will inevitably include a massive reduction in defense spending, we are opening a vista with implications as radical for international relations as the similar hyperinflation-stoked reduction in the Russian military ambition after 1991. Except unlike in the 1990s, there's no clear power that will rush in to occupy the power vacuum left by a withdrawing Soviet military. As a thought-experiment, it's worth thinking about what a de facto withdrawal of the U.S. security umbrella would mean in places like Northeast Asia or Europe -- not to mention the Middle East. Security regionalization looks likely to be a byword for the 2010s.

My friend Stephan Faris's new book, Forecast, was published today. I read it in draft, and recommend it highly. It's written as a travelogue that takes a close look what climate change is doing (and is likely to do) to a broad range of human environments, from Darfur and Bangladesh to Napa and the Amazon. Buy it.

I'm on a kick right now reading a series of recent books on civilizational decline, trying to understand what a post-industrial future will look like, and what living through the transition away from an energy-intensive civilizational framework will feel like, both physically and intellectually. There's a variety of important texts out there for understanding what this process will look like, and I'll be posting from my readings regularly.

These gentlemen (and it seems that most all writers on this topic are North American men--a fact possibly worth pondering) come from a wide variety of political and technical backgrounds, but they all converge on a common set of themes. The key variable, for most of them, is peak oil (or, more precisely, the asymptotic approach of EROI toward 1.0). This spells the end of the energy-intensive, globalized industrialism that U.S. politicians like to refer to as the American Way of Life. They concur that the industrial world will not end in a bang but rather in a whimper. (All them rightly excoriate End Days-Road Warrior apocalyptic visions as merely the inversion of the faith that endless technical progress will forever propel our civilization forward, eventually to other solar systems.) Most agree that the secular decline has begun in the center of this industrial civilization, marked by the stagnation or decline in the median standard of living over the last generation. All agree that the ride down will take a long time, and be, in technical economic terms, very lumpy. Most of them, I suspect, would agree with me that Hurricane Katrina, in both its ecological and its political implications, was not a one-off failure but rather represents a dark glass for scrying the future. All agree that government isn't going to save us, and suggest various strategies for learning to live locally.

So what will this look like as we play it forward? For my money, the best brief scenario for what this decline will look like is Greer's:

Imagine an American woman born in 1960. She sees the gas lines of the 1970s, the short-term political gimmicks that papered over the crisis in the 1980s and 1990s, and the renewed trouble in the following decades. Periods of economic and political crisis, broken by intervals of partial recovery, shape the rest of her life. By the time she turns 70, she lives in a beleaguered, malfunctioning city where nearly half the population has no reliable access to clean water, electricity, or health care. Shantytowns spread in the shadow of skyscrapers while political and economic leaders keep insisting things are getting better.

Her great-grandson, born in 2040, manages to avoid the smorgasbord of diseases, the pervasive violence, and the pandemic alcohol and drug abuse that claim a quarter of his generation before age 30. A lucky break gets him into a technical career, safe from military service in endless overseas wars or "pacification actions" against separatist guerrillas at home. His technical knowledge consists mostly of rules of thumb for effective scavenging. Cars and refrigerators are luxury items he will never own, his home lacks electricity and central heating, and his health care comes from an old woman whose grandmother was a doctor and who knows something about wound care and herbs. By the time his hair turns gray the squabbling regions that once were the United States have split apart. All remaining fuel and electrical power have been commandeered by new regional governments, and coastal cities have been abandoned to the rising oceans.

For his great-granddaughter, born in 2010, the great crises are mostly things of the past. She grows up amid a ring of villages that were once suburbs, but now they surround an abandoned core of rusting skyscrapers that are visited only by salvage crews who mine them for raw materials. Local wars sputter, the oceans are still rising, and famines and epidemics come through every decade or so, but with a global population less than half what it was in 2000 and still declining, humanity and nature are moving toward balance. The great-grand-daughter learns to read and write, a skill most of her neighbors don't have, and a few old books are among her most proud possessions, but the days when men walked on the moon are fading into legend. When she and her family finally set out for a village in the countryside, leaving the husk of the old city to the salvage crews, it likely never occurs to her that her quiet footsteps on a crumbling asphalt road mark the end of civilization.

We're living the industrial analog of the Severan Dynasty. It's worth thinking carefully about how people living in the few decades after that experienced their world, as it marked the shift from the classic ancient world to the world of so-called Late Antiquity. Can Obama be our Diocletian?

Invoking St. Nicholas as an instrument of an occasionally vengeful G*d I would like to ask this week for a single pillow; placed over the face of Robert Mugabe and held there until the sun rises in Zimbabwe.

Even since the voters of California decided to protect chickens but not same-sex couples we knew this day was coming:

The sponsors of Proposition 8 asked the California Supreme Court on Friday to nullify the marriages of the estimated 18,000 same-sex couples who exchanged vows before voters approved the ballot initiative that outlawed gay unions.

The Yes on 8 campaign filed a brief arguing that because the new law holds that only marriages between a man and a woman are recognized or valid in California, the state can no longer recognize the existing same-sex unions. The document reveals for the first time that opponents of same-sex marriage will fight in court to undo those unions that already exist.

"Proposition 8's brevity is matched by its clarity. There are no conditional clauses, exceptions, exemptions or exclusions," reads the brief co-written by Kenneth Starr, dean of Pepperdine University's law school and the former independent counsel who investigated President Bill Clinton.

Ah, Ken Starr, you dick.

I question the use of the word "reveals", this is like saying "Joe bought a case of condoms and has revealed for the first time that he plans on having sex."

My own take on it, shared by a constitutional law professor friend of mine who happens to be a lesbian, is that the word "marriage" does have religious meaning in most faiths, for better or for worse. A much more comprehensive approach to establishing this particular freedom of association would be to acknowledge that fact and challenge the constitutionality of the State santioning a religious activity.

A win would threaten the canon of family law and force legislators to establish, for everyone, a solution absent of religion. A civil solution for a civil right. As for marriage, you are free to pick a faith which is truly inclusive, or ends participation with 'hillbilly heroin' dealers.

Humans are inducing such rapid biological change to the planet that a scientific consensus is forming that we have entered a new geological epoch, the Anthropocene. The term was originally coined in 2000 by the atmospheric chemist Paul Crutzen, to denote that the impact of industrial-era humans on the planet were creating such an impact (notably by spurring climate change, but also more generally inducing a huge die-off in species) that our own era deserved a different moniker than the the standard Holocene--that is, the post-ice age era that began some 10 millennia ago. Geologists are now joining the bandwagon, arguing that human effects on the planet are creating a distinct stratigraphic signature, based on the about of exotic chemicals, radioactive elements, and above all carbon that we are spewing into the environment.

Obviously, I'm not an expert on such debates, but as a sometime historian, I know a thing or two about disputing periodization. My own view is that "in the long run" (that is, from the point of view some putative scientific observer millions of years from now), it would not make sense to demarcate the Anthropocene from the Holocene. In fact, seen in geological terms, the heat-up of the planet that happened 14,000 years ago and is now set to take another sharp uptick, should really be seen as one continuous process. Seen from the perspective of millions of years, the planet has been in a glacial period for several million years, with phases of warming and cooling, in which species were fairly stable. The last phase of cooling, however, happened to spit out a novel feedback element (modern humans, which evolved around 100-150K years ago) that happened to engage in behavior that diverted the usual cooling cycle, such that the planet now appears to be shifting to a definitively post-glacial period, more climatically akin to the way the world was some 55 million years ago.

However, seen in the millions-of-years perspective, the two distinct heat-ups -- the one 14K years ago and the one now -- look less like two distinct events, and more like one continuous event, rather than two distinct events, and should probably be interpreted as such. After all, the massive extinctions we are witnessing now are of the same order (and arguably, so far, less severe) than the ones that took place 10K years ago, when much of the North American megafauna was killed off, radically changing the North American continental ecosystem.

Indeed, I'd argue that human-induced climate change is just another part of the wider ecosystemic feedback mechanism that humans are. Further, I'd argue that, qua feedback mechanism, humans are no different in our bio-geologic essentials than any other feedback mechanisms, such as the release of methane from melting tundra. I would argue that it is merely a conceit, a kind of species-narcissism, to think that just because we humans understand this feedback process that this makes our participation in that feedback mechanism somehow radically different from any other feedback loop. Neither scientific consciousness nor intellect generally are a geologic features.

Wednesday, December 17, 2008

Someone should check George Bush's neck for bite marks, because he's suddenly breaking out a surprisingly statesmanlike approach to governing, providing the Obama team with extensive contingency plans for dealing with various possible emergencies that may erupt early in the administration. Money:

"This doesn't absolve the Bush administration of some of their judgments they've made over the years, but this is the right thing to do," said a Democrat close to the transition who did not want to be named to avoid alienating the team. "This is when enlightened self-interest works."

The real reason that comp in investment banking should be regulated is that the comp levels attract people who are very energetic but in a stupid way and greedy way. Its an entire industry populated by lobotomized greyhounds.

Tuesday, December 16, 2008

With all of the Madoff madness it is good to see some in-depth coverage from the Washington Post of the much bigger pyramid scheme which is taking us all down right now, the packaging and repackaging of mortgages. From the lead,

It was Wall Street's version of an inside joke: Take a motley collection of largely unwanted assets, repackage them into a new set of bonds, and name it after the pristine white-sand beaches of an exclusive New Jersey town where Katharine Hepburn once summered.

to the close,

Former SEC commissioner Paul S. Atkins, a strong advocate of deregulation during his six-year tenure that ended earlier this year, agreed that the trading of CDOs and other private investments must be done more openly to prevent systemic risk. But he cautioned that there needs to be smarter regulation, not just more rules.

"Remember this crisis began in regulated entities," Atkins said, referring to investment and commercial banks overseen by the SEC and other federal agencies. "This happened right under our noses."

this article shows both the promise of journalism and the problem of groupthink inside a bubble.

Inside The Bubble, as Obama well knows, lurks a further danger: groupthink. Obama has used this Orwellian word himself. "One of the dangers in a White House, based on my reading of history, is that you get wrapped up in groupthink, and everybody agrees with everything and there's no discussion and there are no dissenting views," he said this month.

Cohen has an self-serving antidote for the president-Elect: the newspaper. Given the quality of above article I will go ahead and give him the cure; but given Obama's self-awareness, and his appointments so far I am not sure we will see a repeat of the disease.

Sunday, December 14, 2008

Here's a story I just don't understand: the Justice Department is apparently refusing to allow the Obama transition team to examine the classified legal memos that sanctioned NSA wiretapping of US citizens and the CIA torture of terrorist suspects. This follows on the heels of the rumor that Mike Griffin, the head of NASA, is also refusing to cooperate with the Obama transition team, claiming they aren't technically qualified to judge the merits of NASA's program's.

Assuming these rumors are true, I fundamentally don't get this approach. If you've got a new boss coming in who you think is likely to torpedo your favorite program, the best approach has to be to make a strong case for those programs, not to deny him or her access to the information or to claim that he or she doesn't know enough to make a call on whether these programs are good. I mean, Obama's going to be the boss in five-six weeks--all that blocking his team access to information is going to do is sow ill will that will increase the chance that they will reverse these policies.

This seems like such a bureaucratically self-evident observation, that it casts doubt on whether these stories can possibly be true. (Indeed, Griffin is vigorously denying any rift with the incoming administration--although there seems to be litle doubt that there are sharp policy differences.)

Then again, maybe these guys are simply trying to cause as much trouble as possible in order to disrupt Obama's ability to govern. Seems like you have to assume that they are both malign and stupid in order for that to be the case.

Friday, December 12, 2008

A few years ago as part of buying a house the old-fashioned way, saving up money beforehand, we stopped going to restaurants during the week. It was depressing how much money this saved. The exception was Thursday night, when we did cheap takeout. Of course once you have the house you have to maintain the house and what exactly where they thinking when they put that tile in the bathroom? So, the tradition continued.

And the back-story continues. A friend of a co-worker does marketing for Budweiser and he provided some insight on their advertising theme. It seems that the overall goal of Budweiser advertising is to establish it as the “default beer,” not the best beer, the default beer. I was fascinated by the idea and have been looking for similar patterns in other marketing campaigns and in the grand tradition of looking for something you see it everywhere. Particularly in policy campaigns, where I am looking hardest. On almost every issue there is a mad scramble to define the “default solution.”

Theory in action occurred last night as I stopped to pick up wine before getting the takeout. A couple walked in, he strolled over and bought one of the 2-liter white wines they sell while she gazed in wonder at the wall of beer in the coolers. “What should I get?” she asked. “I don’t know, Bud Light?” he asked back. A 12-pack of Bud Light was soon on the counter, the default beer.

Thursday, December 11, 2008

Pundita has some very flattering things to say about Mandarins of the Future, and she also correctly notes that my current efforts to understand deviant globalization are built on the foundation of insights generated from the earlier study.

But it's also important to note that the concept of deviant globalization has also been deeply informed by my collaboration with Jesse Goldhammer and Steve Weber, starting with in the course we taught togehter at Berkeley last year, who have brought with them a very different set of ideological, theoretical, and methodological commitments. Likewise, I've learned a vasy amount from reading and talking to, among others, John Robb, Mark Duffield, John Hagedorn, Mike Davis, William Langeweische, Carolyn Nordstrom, and Moises Naim.

My understanding of deviant globalization has also been shaped by my client work, which over the last several years addressed topics as seemingly disparate but in fact deeply intertwined as

how urbanization happens without industrialization

what vast and growing wealth disparities means

how the poor are reacting to climate change

what the implications are of the commercialization of a vast number of crucial social functions that used to be managed either by governments or deeply rooted cultural institutions

and how all this intersects with the rapid proliferation and democratization of media and communications technologies

Daniel Lerner wasn't wrong when he claimed that the adoption of modern media would fundamentally undermine traditional societies, ushering in "modernity." What he was wrong about, however, was the meaning of modernity.

Tuesday, December 09, 2008

An NPR story this morning gives a good example of the inefficiencies of greed. The greed in this case is not for money, but for position and power, the currency of bureaucracy.

In New York City, the local police and the feds do not get along — at least when it comes to counterterrorism. Now the FBI has a new man in New York. His name is Joe Demarest. Besides guarding against terrorists, his top job will be to help patch things up between the New York Police Department and the FBI....That's because things are a little different in New York. While the law enforcement community does pull together in a pinch, the personalities are very strong, very "New York." The U.S. attorneys are aggressive, and so are the district attorneys. As the police commissioner of America's most populous city, Kelly is used to picking up the phone and calling [FBI Director] Mueller directly. And if he doesn't get what he wants from that call, he'll call his friends on Capitol Hill.

Something to keep in mind as various proposals for more government involvement in certain industries bubble up, trade and trespass will always find its currency, be it dollars, mentions in the dispatches, or mackerel. I personally find it easier to follow the money, the machinations are usually more apparent. But neither of the above selections are why the story stuck in my mind this morning, it was this one:

And then there's what happened last month: The head of the NYPD, Commissioner Raymond Kelly, accused the Justice Department of dragging its feet on approving wiretap applications. The Justice Department said the New York police were asking for wiretaps that broke the law. The angry letters between Kelly and Attorney General Michael Mukasey went public.

Exactly how messed up is your wiretap request that THIS Justice Department raises a red flag?

Monday, December 08, 2008

Remember my post the other day about cutting banker pay? Well, here's why I say things in this country are fundamentally out of whack, and may in fact require a solution like the one that Mick calls for: John Thain, the boss of Merrill Lynch--which lost $11B over the last year, necessitating a firesale of itself to Bank of America for about ten percent of what it was worth eighteen months ago--just informed his board of directors that he believes he deserves a $10,000,000 bonus this year.

Sunday, December 07, 2008

I just finished Mark Duffield's latest excellent book, this one entitled Development, Security, and Unending War, a profound analysis of the recent evolution of the official discourse of development (particularly the British discourse of development). Duffield has an annoying tendency to wallow in unnecessary theoretical disquisitions about Giorgio Agamben and Etienne Balibar, but if you bracket that, he offers some extremely interesting insights that bear very directly on the politics of deviant globalization.

First, the central historical thrust of Duffield's book is the story of how the NGO-led model of development, which emerged in the 1980s and which remains dominant to this day, displaced modernization theory, which was the dominant model of development from the early cold war through the middle 1970s. Unlike modernization theory, which sought a technology that would allow post-colonial states to "close the gap" with the developing world, the NGO-led model of development seeks to "contain" and "stabilize" the poor. Institutionally (as we know from reading James Scott), the high modernist model of development believed that the state should be the instrument that would drive development. By contrast, the NGO-led model believes in working around the state, which is rightly perceived as corrupt and predatory. (Of course, while the NGO-friendly "sustainable development" movement likes to think of itself as politically progressive, its anti-statist bias dovetails very conveniently with neoliberal views of reducing state power--hence the liberal-conservative "consensus" in the Washington Consensus.) Successful development, in this model, is not about "catching up" but rather about achieving "sustainability" or "self-reliance." Contemporary liberal developmental dogma holds that such "self-reliance" not only provides local dignity and eliminates the need for humanitarian interventions, it also reduces local sympathy for radicalism, jihadism, etc.

Second, analyzing this NGO-led model of development, Duffield points out that the use of NGOs to deliver developmental aid and to perform aid-effectiveness monitoring compromises the sovereignty of the subject state by wresting the biopolitical commanding heights (e.g. population surveilance and monitoring) away from the state, and placing these responsibilities in the hands of non-governmental organizations. With a nod to Judith Butler, Duffield describes this process as a multiplication of "petty sovereignties." His point is that in much of the so-called developing world, "governmental" functions (e.g. the delivery of "political goods" such a social services, health care, education, security, etc.) are being taken over by non-state actors.

Because he is writing about the official development discourse, Duffield focuses on the role of official (that is, West-approved) NGOs in this process of multiplying petty sovereignties. But he might also have pointed out that there are plenty of other non-state actors that are taking on (or taking back) these "governmental" functions: tribal elders, gangsters, religious leaders, transnational and local corporations, mercenaries, ethnic militias, etc. I would suggest that, rather than refer to non-state actors who deliver political goods generically as "NGOs," we should instead refer to them as "governmental organizations" (not to be confused with "government organizations," which ironically enough are often not performing these "governmental functions").

Third, while most of Duffield's book is an extended analysis of the evolution of the official discourse of development, he also briefly alludes to the danger at the heart of making "self-reliance" the key metric of developmental success, in a passage that resonates with my own work on deviant globalization:

Self-reliance has a dangerous ambiguity in relation to attempts to strengthen state authority. When successfully and innovatively pursued, rather than being a process of governmentalization, self-reliance supports resistance and imparts independence. The "actually existing development" of informal trade, illegal commodity procurement, transborder smuggling networks and diaspora enterprise can encourage centrifugal forces of autonomy and alternative cases of legitimacy (p. 183).

Trying to wrap my head around "actually existing development" is precisely what I've been after ever since I finished my book on modernization theory. Duffield's book offers the beginning of a vocabulary for understanding what is happening on the ground in weak or fragile states. The majority of people in these locales of course merely become victims of the situation into which they are born. But there are some who refuse to be victims, and follow their entrepreneurial instincts (read: risk-willingness and bloody-mindedness) to make the best of their situation, using the channels provided by globalization to free themselves. These are the people who participate in the economy of deviant globalization.

Deviant globalizers know the state is neither going to help them close the gap with the rich world, nor protect them from the buffets of the global market. But for that very same reason, they are also not revolutionaries: they have no interested in seizing the state to enact development (that's so twentieth century). Rather, they seek autonomy from the state, so that they can build their economic empires and establish alternative forms of legitimacy. This analytic applies broadly to groups as otherwise different as the PCC, Laurent Nkunda, Lakshar e Taiba, Viktor Bout, Hamas, Mara Salvatrucha, and the Muslim Brothers. These deviant entrepreneurs aren't waiting for the state -- or for Washington-sanctioned NGOs -- to come to their rescue. They're doing it for themselves.

The most popular homemade online video of this past campaign season was not, liberals may be surprised to learn, Will.i.am's "Yes We Can," but rather the following independent video released in support of the McCain campaign:

What's effective, and affecting, about this video is not just that the young veteran politely criticizes Obama on the point that made his candidacy within the Democratic party. (Obviously one can argue with the substance of what the young man has to say -- notably his ridiculous claim that "Iraqis are just like us.")

Rather, the real effectiveness of his video comes less from the words than in the sincerity and personal nature of this veteran's commitment to those words that gets demonstrated visually when he walks away from the camera. It is ironic that this mode of visual persuasion was originally (and, even more effectively) used by the epic anti-war documentary "Hearts and Minds," which won the Academy Award for best documentary in 1975 (and which the same kinds of people who probably like the video above excoriated as a hachet job). What makes both the video above and "Hearts and Minds" so moving is the way that passionate, sincere words are given forceful weight by a visual trick which, after the intellectual argument is made,seals the case by visually "proving" the commitment of the speaker. (Only a cynic would argue, in both cases, that the personal sacrifices of the speakers delegitimate what they have to say: in the case of the video above, is the veteran merely desperate to ensure that his personal sacrifice was not fruitless? in the case of the anti-war veterans of "Hearts and Minds," are they merely displaying bitterness over their personal sacrifices?)

Update: The original version of this post incorrectly implied that this video was produced by the McCain campaign. In fact it was produced independently, in support of the McCain campaign, much as Will.i.am's video was produced independently, in support of Obama. I have changed the wording of the post to make this distinction clear.

Thursday, December 04, 2008

I was on vacation last week and have spent most of this week catching up on the myriad of blogs I read daily; so it was refreshing tonight to sit down and do some honest-to-goodness web surfing, just riding links through the craziness. It was “Bride-to-be Lost at Sea” which led me to OregonLive.com, the website of The Oregonian with such headline goodness as:

It was the last one which got me to thinking. Earlier this week I sat in on a pitch meeting from some visual information wizards --political, not Tufte stuff-- and I flashed back to the meeting when the page loaded with the article. Now the headline obviously did the trick, I clicked through, but in terms of properly using the visual they totally missed an opportunity. "Armed sex offender on the loose" gets you traffic, but

THIS MAN HAS A GUN AND WANTS TO FORCIBLY SODOMIZE YOU

rallies those crazy gun buyers and thieves, plus every machete wielding maniac in the Northwest into a frenzied mob to track this guy down. Then afterward they could help the Coast Guard find the other guy’s mail-order bride. Now that would be community organizing.

Wednesday, December 03, 2008

Maybe its my bolshy tendencies, or more likely my ethnic background, but I have an instnct that massive payand wealth disparities are a sign of a sick society. While I have respect for entrepreneurs who have built lasting businesses and gotten rich doing so, the paydays in the finance sector over the last three decades have been, to my mind, sickening. And with the current financial meltdown, even some longtime and sympathetic industry observers are beginning to look at it the same way, and finding the testicular fortitude to dismiss the usual hogwash about how lower pay would lower performance:

I've now reached the point at which I simply don't believe people when they say that lower pay for bankers will result in worse performance -- especially since it looks very much as though it was higher pay for bankers which was at least partly responsible for much of the present crisis. Let's bring down pay, a lot, and see whether performance really falls.

The financial system went for decades, quite happily, without monster paydays: why can't we go back to those days? No one thinks we need to pay the Treasury secretary lots of money to make sure he's "working hard"; why are bank CEOs any different? And insofar as lower bank salaries would drive America's best and brightest into other sectors of the economy, that would surely be a good thing.

A massive, across-the-board pay cut in the banking system -- to levels which would still be incredibly generous by normal-America standards -- might result in a mass exodus of employees and a radical downsizing of the banking sector. But that's going to happen anyway, this would just achieve it without layoffs. And the outcome can't really be worse than what we've seen to date.

I don't know how you legislate this except through taxation, but as a matter of political ethics, this is just about common sense and democratic decency. The argument for much greater pay equality is fundamentally about political justice. And just as Salmon dismisses as nonsense the argument that lower pay would lower performance, I dismiss as nonsense the claim that higher taxes compromise the liberty of the rich.

Wednesday, November 26, 2008

One can of course overdo the parallels between the Soviet Union and the United States, and how the collapse of the Soviet Union, rather than heralding the triumph of the United States's model, actually was the prologue to the collapse of high modernist states everywhere, including the United States. That's Dmitry Orlov's position, and it's a thought provoking one that just been echoed by a leading political analyst in Russia, who claims the U.S. is about to follow the exact same fate as did the Soviet Union:

US will collapse and break up, Russian analyst predicts

The United States will collapse under the burden of its financial crisis and fracture into six parts, a Russian political analyst has predicted.

By Tom Leonard in New York

Last Updated: 10:58PM GMT 25 Nov 2008

Igor Panarin, a professor at the Diplomatic Academy of the Russian foreign affairs ministry, said the economic turmoil in the US had confirmed his long-held belief that the country was heading for extinction in its present form.

In an interview with the Russian newspaper Izvestia, he outlined how the US would divide along ethnic and cultural lines.

They are: the Pacific coast with its growing Chinese population; the increasingly Hispanic South; independence-minded Texas; the Atlantic Coast; a central state with a large Native American population; and the northern states where – he maintains – Canadian influence is strong.

Alaska could be claimed by Russia, he said, claiming that the region was "only granted on lease, after all".

Of course, writing such a line must give a Russian great schadenfreudeliche joy, but that doesn't make it true. The United States is a much more thoroughly integrated place than the Soviet Union was in the 1980s, and while a massive collapse and deglobalization of our economy is certainly possible, there aren't any centrifugal forces affecting the territorial integrity of the country. A race war or failed state is much more possible.

The Millennials -- the 95 million Americans born between 1978 and 2000 -- are emerging onto the political and economic stage. A recent survey characterizes the Millennial worldview this way:

A commitment to the common good over individual gain; an ethos that reaches across traditional divisions such as race, ideology, and partisanship. The Millennials are not a "Generation Me" but rather a "Generation We." They are strongly progressive, socially tolerant, environmentally conscious, peace-loving, and poised to lead the biggest leftward shift in recent American history. They volunteer in record numbers and declare themselves ready to sacrifice their self-interest for the greater good. They do not fit neatly into any classic ideological category and are clearly eager to establish a new paradigm.

A comprehensive rejection of the country's current leadership and dominant institutions. Whether it is Congress and the federal government, major corporations, or organized religion, these young Americans believe the large institutions that dominate so much of our modern society have comprehensively failed, placing narrow self-interests ahead of the welfare of the country as a whole.

I wonder whether people under 30 don't always have opinions of this sort. In other words, I wonder whether these values are enduring features of this generation, or rather something that will change as they age. I'm mindful of the cliche that anyone who's not a liberal at age 20 doesn't have a heart and anyone who's not a conservative at 40 doesn't have a brain.

Saturday, November 22, 2008

Being able to manufacture and export a motor vehicle is considered, for many very good reasons, the hallmark of an effective industrial power. Not many countries can do this: India, Japan, Korea in Asia; the United States in Americas; Germany, France, Italy, the UK and Sweden in Europe. Countries that once had car-export businesses that were allowed to die don't make an encouraging list: Yugoslavia, Russia, East Germany... you get the picture. Without getting into the details of what automanufacturing means to the U.S. economy, the symbolic salience of the industry is enormous. And that's the context for the proposed bailout of Detroit.

But the thing is, it's clearly a bad deal for taxpayers. How do we know this? Because if it weren't a bad deal -- that is, a deal almost certain to lose money not just in the short but also in the long run -- then the auto industry execs would be flying their private jets to New York, Houston, or London to meet with private equity investors, not to Washington to meet with Congress. The sad but almost certain fact is that throwing wads of cash at Detroit to unblock that indusrty is unlikely to be any more effective than it is to throw wads of cash in a toilet when you want to unblock that.

The larger issue is that the U.S. auto industry, in terms of the way it is structured, the products it produces, and now the way it is attempting to save its sorry ass, is a symptom of everything that is wrong with the U.S. economy, and above all, with what you might call our economic culture. Michael Moritz, the legendary Silicon Valley investor, provides a long backgrounder on the history that led Detroit to its current sorry impasse, and puts paid to the arrant claims that this bailout is what will finally bring Detroit around to producing greener cars. Money:

No American politician – particularly any that have eyed the rustbelt’s 121 electoral college votes – have ever been able to summon up the courage to say that cheap petrol is not America’s birthright.

It has been a deadly curse. Except on rare occasions Americans have had no need to stop buying high cholesterol vehicles – pimped out vans in the 1970s, out-size SUVs in the 1980s and trucks in the 1990s. The only times that consumer excess was tempered was when petrol prices spiked following the 1973 oil shock, the fall of the Shah of Iran in 1979, the first Iraq war and this past summer. In current dollars, the price of petrol in the US has barely moved since the late 1970s.

As a nation we have lived well beyond our means and nowhere is this more apparent than at the petrol pump – where the extent of our national dissolution is on full display. The future of Detroit, the battle for the future of the US economy, the effort to wean ourselves from the teat of foreign oil and the attempt to clean up our air are all irrevocably linked. Just imagine what today’s American automobile fleet would look like if since the second world war – or even since 1980 – we had been made to pause before we filled our tanks. In 1999, for example, while we luxuriated in $1.26 for a gallon of petrol, Germans were paying $3.62 and the Japanese $3.26. It is no surprise that the Japanese, German or Korean manufacturers came to perfect the production of smaller, more fuel efficient engines and vehicles – their customers could not afford to run thirstier vehicles.

I have tried to make the case for a sizeable petrol tax to a number of politicians but have yet to encounter one who wants to discuss the idea seriously. It is just too dangerous to their future livelihood. Instead, in less time than it takes to switch on the ignition, they will say that this would be unfair to low-income Americans, or that it is the last thing the country needs in a time of recession, and then the conversation is steered to safer topics such as the virtues of carbon credits, the noxious ways of coal-powered generating plants or the pipe-dreams of hydrogen-powered cars.

The $25bn of low cost loans given recently to the auto industry to encourage the development of “greener” cars is the result of this woolly thinking. On the surface it seems laudable. Who would argue against more fuel efficient cars? But it is just a bailout in presidential clothing. The money would be far better used if it were directed towards basis research and development within our universities.

Amen. One of the first tests for Obama is whether he is willing to say no to Detroit.

There's a rumor out in the right-wing British papers that Obama plans to set up a "domestic spying" agency in the Department of Homeland Security, that will be modeled after Britain's MI5.

I have no idea if it's true, but I think it's a good idea. (This may surprise some readers. But attentive readers will note that Small Precautions, while critical of the Bush regime on many counts, has never criticized Bush on the substance of domestic wiretapping -- though the fact that it was not legislated and simply decided by diktat was reprehensible.)

If this comes to pass, prepare for a festival of hypocrisy from both right and left in this country

"Everyone is having these huge sales, and consumers know if they wait longer, the chances of them not having a good selection is fairly small and the chances are that the prices will be lower," said Charles McMillion, an economist who runs MBG Information Services. "So why buy today? This is exactly why economists are always scared to death of deflation."

I may have to go with deflation simply because the guy's name is McMillion. Seriously, Lacker, McMillion, Kashkari, this crisis has the best names, we are certainly living in interesting times, and it appears that Rahm Emanuel has read The Shock Doctrine:

He said the current economic crisis offers opportunities for change that wouldn’t have otherwise been possible. “Never let a serious crisis go to waste,” he said.

Now I actually agree with the idea of going "long and deep", and not just because it sounds dirty. We have been engaged in an ideological civil war in this country since 1994 and we need to end it.

But November 4th wasn't an ending, it was a turning point. If the election of Barack Obama was Gettysburg, we still have a long, hard slog to Appomattox. And winning isn't the only challenge. Many idiots have won wars (ahem, mission accomplished) the bigger challenge is achieving victory in such a way that you can also win the peace. My nightmare scenario right now, and Waxman's chairmanship just feeds this, is scorched earth progressivism for two years and then a Reaganesque Reconstruction.

Thursday, November 20, 2008

I just plugged Small Precautions into TypeAnalyzer, which claims to identify what "type" you are in your blog. Here's what it came up with:

The logical and analytical type. The Thinkers are especialy attuned to difficult creative and intellectual challenges and always look for something more complex to dig into. They are great at finding subtle connections between things and imagine far-reaching implications.

They enjoy working with complex things using a lot of concepts and imaginative models of reality. Since they are not very good at seeing and understanding the needs of other people, they might come across as arrogant, impatient and insensitive to people that need some time to understand what they are talking about.

Wednesday, November 19, 2008

I realize that the subtext of this post is how out of touch I am, but still, I just learned about this site today, and it reminded me of why the Internet is so awesome.Update: What kind of a sick mind wakes up one morning and thinks to himself of a site like this, thinks that a site like this will meet an unmet need? But there clearly is: each posting gets close to 100 comments!

Nicholas Nassim Taleb, the man who coined the an original cliche in describing "black swan" events, gives birth to the mother of all hype, declaring the current financial crisis to be not just the greatest crisis since the Great Depression, but since the American Revolution.

Now, I'm not averse to extremist thinking, but hey: a bigger crisis than the Civil War?

I have no idea whether Hillary Clinton will make a good Secretary of State, but as a matter of politics, Obama giving her the spot is brilliant. In ascending order of Machiavellian-ness:

It embodies the "team of rivals" approach to governing that Obama has promised to follow. (As an aside, I note that Obama's modeling himself after Lincoln is not exactly modest, but also hardly a bad thing. For those on both the left and the right who either hope or worry that Obama is a secret radical, it's worth remembering what a profound moderate Lincoln was.)

It neutralizes the biggest potential threat to Obama in 2012. Over the past 40 years, Presidents up for reelection who face serious rivals in the primaries always lose (Ford '76 -- from Ronald Reagan; Carter '80 -- from Teddy Kennedy; Bush '92 -- from Pat Buchanan) whereas those who don't, always win (Nixon '72, Reagan '84, Clinton '96, Bush '04). Hillary is Obama's only current serious threat for a mid-term rival, and this neutralizes her

Watching this debate unfold I am reminded of P.J. O'Rourke's coverage of the 1990 Nicaraguan election in which the Sandinistas were removed from power. One of the American election monitors --who went down expecting to validate a Sandinista victory-- lamented to O'Rourke that instead of voting with their brains the Nicaraguan people “voted with their stomachs."

If, as Paul Krugman presents, "we’ve become a banana republic with nukes" then the 1990 Nicaraguan election may provide the answer to the left-right debate. The center has no philosophy; they have needs, desires and fears. Whichever candidate or party can best convince the middle that they will fulfill the first two and allay the last will capture the vote.

The center doesn't care about politics, they care about competence. And after eight years of mind-boggling mismanagement and scorched earth politics the Republicans have no credibility in that area.

Taking another note from Nicaragua, after losing in 1996 and 2001 Daniel Ortega returned to power in 2006. I honestly don't think it matters if Obama, Reid and Pelosi decide to push change fast or slow, as long as it is smart change, and most importantly it works.

Sunday, November 16, 2008

As previously mentioned, I gave a lecture two weeks ago at the European Futurists Conference on the the global illicit economy, which forms the base of what I call "deviant globalization." The video of the event is now online:

Over the past generation, conservatives have managed to popularize the concept of "moral harzard" -- the concept that if you prevent people from feeling the full downside brunt of their poor choices, they will consistently take foolish risks. It's a real problem, and having the prudent subsidize the imprudent is patently unfair.

However, there's an opposite risk associated with trying to make everybody solely responsible for their own risks, and that is the lesser-known problem of "adverse election": namely the problem that you can't run any kind of social program if the people who have less than average need for it are allowed to opt out, since this will steadily erode the quality of the pool that is left.

Imagine a population of a million similar families, living in a million more or less similar houses. From long experience it is known that the chance that any given family will suffer a severe fire in any given year is about one in ten thousand. In other words, we can expect about a hundred fires per year. The same experience tells us that the average amount of damage per fire is $200,000. So the total damage per year is some $20 million. Serious house fires are rare, but when one occurs it is devastating to the unlucky family.

The existence of fire insurance makes an enormous difference. If each of the million families pays an insurance premium of $20 a year, all damages can be reimbursed. Major house fires would still not be welcome events; but they would not be financially catastrophic. The small probability of a large loss is eliminated, and replaced by a small but certain cost. Insurance companies would have to charge a bit more than $20 per house, to cover administrative costs and profit. Also companies would have to build up a reserve, to allow for the fact that annual losses would surely fluctuate around the average of $20 million, with an occasional bad year. On the other side of the ledger, investment of the reserves, presumably in reasonably safe and liquid securities, would offset at least some of the costs of the system.

Nevertheless, fire insurance has its problems, two in particular. Notice, first, that the existence of fire insurance does nothing to diminish the number of fires. Insurance is a way of pooling or sharing risks, not of eliminating them. In fact the opposite is true: the existence of fire insurance probably increases the number of fires. In the absence of insurance, one has to expect that home owners will be very careful about loose matches, old soldering irons, and other such dangers. The knowledge that they are fully covered may lead to some carelessness, and to more fires. This sort of effect is called "moral hazard." (It is why subsidized flood insurance encourages people to live in flood plains.) Insurance companies have devices to discourage moral hazard. Deductibles and co-payments are two such devices: no fire is costless to the insuree. Required precautions are another device; every insured home is supposed to have an approved extinguisher and smoke alarms.

The second problem is different. All houses are not alike, after all. Some are more fire-prone than others. To take an extreme case, suppose that 90 percent of the million homes have, for various reasons, essentially no risk of fire. The hundred fires per year all come from the remaining 100,000, each with a probability of one in one thousand. They are responsible for the annual damage cost of $20 million. The 900,000 fire-free home owners very likely know this. They are in effect subsidizing the fire-prone houses, so they will choose not to buy insurance. Only the fire-prone homes will be in the market.

This is called "adverse selection." To be viable, insurance companies will have to charge a premium of $200 per year, and even some of the fire-prone home owners may balk. You can easily imagine how the whole insurance market might unravel if there are houses of many degrees of fire-proneness: each time the rate rises, the least vulnerable, least fire-prone customers may drop out, leading to a still higher rate and still more dropouts. Insurance companies may respond by refusing coverage altogether to very fire-prone houses (or refusing health insurance to people who look as if they might actually become seriously—or expensively—sick). Modern information technology and data-mining techniques make it possible for insurance companies to pinpoint the known risks associated with individual applicants and quote "appropriate" rates.

Naturally, they do; but this only further undermines the insurance principle. Unless something drastic is done about it, adverse selection can lead to a situation in which precisely those who need insurance most cannot get it, or cannot afford it. Keep in mind that it is in the self-interest of the safe or healthy not to be in the same insurance pool, paying the same rate, as the fire- or sickness-prone, because they will be paying in more than the costs they incur, so that others can pay in less. In such cases, if adequate insurance is to be provided, there may have to be external regulation or direct public provision.

Now, the obvious political point here is that the conservative governing philosophy is focused almost exclusively on eliminating moral hazard, but completely ignores the problems associated with permitting adverse selection.

As those of you who have been reading Small Precautions know, this blog was launched exactly four years ago, in the aftermath of Kerry's loss to Bush in the 2004 election. Part of the motivation for blogging was as a kind of political therapy, as a way to process my disbelief that the country could possibly have reelected someone as criminally incompetent as Bush, and in part as a way to offer some small token of dissent and resistence to the horror of having that guy at the helm for another four years. (Confession: it was also partly about relieving my boredom with the job I had then.)

However, now that we're entering a new political phase for the country, it seems reasonable that Small Precautions should also take a new form, and to that end, I am introducing a new contributor. The goal of this blog will no longer be simply to register the trends and politics that seem to matter most in a world politically dominated by feckless conservatives, but instead to pluralize the discussion to include a variety of interests and points of view, some of which may in fact by at odds with my own. The model here will be other group blogs, such as Crooked Timber, in which the unifying element for the writers is less a unified partisan orientation (as is the case for blogs like Daily Kos or the Corner), and more of a shared sensibility, which in our case, might well be termed an appreciation for the political sublime.

With that, let me introduce my friend Brad Peck, another disloyal clerk. Brad lives inside the Beltway and thus has a fake job, he actually gets paid to read, and respond, to blogs. In the process he often discovers an article or opinion which, though interesting, is NGW, not germane for work. Brad works at the U.S. Chamber of Commerce, formerly did work for the NSA, and before that was in the Air Force. At a recent dinner this background led one politico to ask him "So how are you a Democrat?" His response, "We are a very big tent."

Friday, November 14, 2008

Yesterday Charlie Rose interviewed Steve Pearlstein of the Washington Post about this weekend's financial summit, and Pearlstein lays out that the agenda is to talk about architecting a new set of (or rearchitecting existing) international financial institutions. The key tradeoff that countries face is between, on the one hand, giving up sovereignty over financial and economic matters to an undemocratic, unaccountable, "global central bank" or else, on the other hand, facing more of these uncontrolled financial flows which periodically erupt into financial catastrophes.

The other key point that Pearlstein makes is that the key political inhibitor tothe building of such new institutions may not be the sovereign suspicions, but actually the concrete implications for the global balance of financial power. Currently, political authority over the key global financial institutions is basically divided between the Western Europeans and Americans, which reflects the actual allocation of global power at the time in the institutions were set up, in in mid-1940s. Any serious reform will have to include a recalibration of that power to reflect the new preponderance of power. In practice, this means giving China and Japan an equal seat at the table, maybe India and Brazil, too. It also means the relative decline of the Europeans, especially Italy and France. (That the French will be inevitably downgraded in any reconfiguration is part of what makes Sarkozy's championing of this process a little weird. Maybe he's figuring that by leading it the French can keep their seat at the table; any why not -- something similar worked for de Gaulle, after all.) The key question is whether there has been enough global suffering yet that the losers in the redistribution of power will be willing to go along with it. I don't think we're there yet.

Five weeks ago I wrote a post about the financial instability scenario planning exercise I participated in back in March, where we thought through the various ways that the mountain of interlocking debts might shake out. As I mentioned then, we talked for a whole afternoon until we came to the conclusion that the money center banks themselves, the epicenters of the modern financial system, might eventually come under threat and require nationalization. "Nationalize the banking system?" asked one of my savviest and most jaundiced colleagues. "That could never happen."

Citi might well turn out to be Hank Paulson's largest and biggest headache. There's no one he can sell it to -- it's far too big already. Which means that Paulson's only real option, if things deteriorate much further from here, is nationalization. Bits of it could be sold, at a price -- the retail bank to Santander, perhaps; other bits to JP Morgan or Goldman Sachs -- but the losses to the taxpayer would be enormous, and the disruption associated with breaking Citi up and then trying to integrate the pieces in the middle of a major financial crisis would likely be devastating to the economy.

Thursday, November 13, 2008

Josh Marshall quote a reader today cheering the staying power of Palin, saying that he "quite agrees" that from a partisan perspective, "the more Palin the better," as he believes it will prolong the GOP's season in the wilderness.

I disagree.

The real threat is not Palin. The real threat is Palinism, that is, the destruction of what Kevin yesterday refered to as "consensual cultural barrier" against the nomination for President of persons that are fundamentally uninterested in and uninformed about national policy at nearly every level.

A meaningful democracy requires not just a set of formal rules about political behavior, concerning voting, apportionment and the like. That's the easy part about democracy; anyone can write a constitution and some election laws. But those laws aren't worth a thing if you don't have deep culturally-rooted norms about political decency.

(This inisight is available to anyone who has ever taken a Comparative Politics course, even if it was unavailable to the neocons who decided that it was a good idea to try to democratize the Middle East at gunpoint.)

What's so insidious about Palin -- or rather, Palinism -- is that it's yet one more example of how the GOP has systematically set out to destroy the basic political-cultural norms that are required to make democracy work. These are norms that cannot be legislated, but must be in place in order for democracy to function. Concepts like "a loyal opposition"; the idea that mobs and judges should not interfere in recounts; the idea that wars should not be sold to the public on false pretenses; the idea that transparency is an essentially desirable element in politics; or the idea that policy knowledge and competence are table stakes for senior political leadership. Again, none of those things can be legislated--they have to exist as norms. And norms only exist when everyone (or anyway, an unquestionable majority) tacitly agrees not to violate them.

The longer Palin lingers as a legitimate presence within the GOP, the more it undermines the cultural-political norm that policy knowledge and competence are table stakes for senior political leadership--a crucial political-cultural norm. That she can be taken seriously is a disaster, even if she personally fails. The fact that she is being take seriously is a terrible precedent. Know Nothingism (for Palin is the direct heir of that venrable tradition in American politics) needs to be quashed. I wouldn't blithely assume that it will sink under its own weight.

The GOP is steadily squeezing the norms of civility and decency out of the tube of democracy. Once that tube is empty, it isn't worth a thing.

Emboldened by EU-inspired reforms, gays are starting to speak up. In June Istanbul hosted the country’s biggest gay pride parade, with hundreds of unfazed riot police looking on. The parade featured veiled transvestites protesting against the ban on Islamic-style headscarves at universities. A vocal band of pious women is now fighting discrimination against cross-dressing compatriots. This alliance is just one example of Turkey’s unusual mix of Islam and democracy.

Friday, November 07, 2008

David Milne has a piece on the various foreign policy intellectuals who may become part of the Obama administration. "In no other country," he observes, "do elected leaders take political scientists so seriously." After reviewing the leading academic candidates for senior roles in the administration, he then asks the money question, namely, Is having intellectuals in the cabinet a good thing?

The good news is that Barack Obama's intellectuals are fine scholars who have produced some thought-provoking books and articles on the best way to deploy American power. The bad news is that Walt Rostow and Paul Wolfowitz were also fine scholars who had produced interesting books and articles on the best way to deploy American power.

So how might this new generation of foreign policy thinkers avoid the mistakes made by their predecessors?

Well, one problem has arisen in cases in which the academic in question has a cherished "theory" to test, and therefore misreads evidence to suit intellectual preconceptions. Through the Kennedy and Johnson administrations, for instance, Rostow believed that the thesis presented in his 1960 book, "The Stages of Economic Growth" -- that all nations are driven by economic self-interest in peace and war -- rendered North Vietnam's infrastructure critically vulnerable to American bombing. "Ho Chi Minh has an industrial complex to protect," he explained. "He is no longer a guerrilla fighter with nothing to lose."

But Rostow was wrong. North Vietnam's leadership was willing to absorb serious damage to further the overarching goal of reunification. Rostow failed to appreciate the power of nationalist ideology.

Similarly, Wolfowitz theorized throughout the 1990s that liberating Iraq from Saddam Hussein would lead to the eventual democratization of the Middle East, a region better known for its authoritarian regimes than for participatory politics. It is perhaps too early to declare that the thesis was entirely wrong. But the last five years have not been encouraging.

I must say that I am vaguely gratified, in a bitter sort of way, that Paul Wolfowitz is becoming to this generation what Walt Rostow was to a previous one -- that is, a byword for a misguided arrogance that thinks good theory can be used to force other people to become free. I like to imagine that this blog has done a small part to contribute to that emerging consensus.

My biggest worry all along about Obama was that he might not have enough of a vicious streak. All that post-partisan stuff never sat too well with me, not because I like partisanship, but because that kind of thinking can shade into not knowing who your enemies are, and not having the instincts to stick the knife in when the opportunity presents itself.

Obama dealt with this concern by pointing out that he was winning the race, and that everyone needed to calm down, which was a good point, but didn't go to the question of whether he had killer instinct. I continue to see Obama's victory as at least in part a result of assisting with the GOP's political suicide, more than as an affirmative push of this country in an entirely new direction. Yes, a black liberal won the election this year, mirabile dictu, but to me that primarily underscored how badly the GOP had fucked the country up, more than it proved Obama's killer instincts.

Now, let me be clear. It's not that I was sure that Obama lacked a killer instinct, it's rather than he had done little to prove he has a killer instinct. I just wasn't sure. Obama had plenty of other virtues that made me support him, but this particular issue was a question mark to me about how effective he would be at actually governing.

Obama's first big announcement since winning on Tuesday, naming Rahm Emanuel as his Chief of Staff, goes a huge way toward allaying my concern. By all reports, Emanuel has brass balls, which is apparently a family trait, since his dad is a former member of the Irgun (the Israeli terrorist organization), and his brother is the killer Hollywood agent Ari Emanuel that the Ari Gold character on Entourage is modeled after. The fact that the Israelis regard Rahm as one of their own may be a good or bad thing, but in terms of demonstrating Obama's desire to kick some ass, the Emanuel appointment is an unambiguous positive.

Update: In terms of what the Emanuel appointment suggests about Obama's likely Palestine policy, I can do no better than quote Emanuel's father, who offered the Jerusalem Post this adorable quote: "Obviously he will influence the president to be pro-Israel.... Why wouldn't he be? What is he, an Arab? He's not going to clean the floors of the White House."

Wednesday, November 05, 2008

The publicly available exit polls now break down data on income and education by racial group. Among all whites without college degrees (40 percent of the electorate), Obama lost by a whopping 18 points. But among whites making $50,000 per year or less (a quarter of the electorate), he lost by a mere 4 points.

Which is to say, the big divide last night wasn’t between working-class whites (i.e., whites without college degrees) and educated whites. It was between working-class whites who are relatively well off, and working-class whites who aren’t. The aforementioned numbers imply that Obama struggled hugely among working-class whites making more than $50,000 per year, but did well among those making less than that. The upshot was that, despite losing the white working-class by wide margins nationally, Obama came reasonably close in the economically depressed states of the industrial Midwest (down only 8 in Ohio and Indiana, actually up 6 in Michigan). Hence the electoral college landslide.

The chart I want to see would compare voting patterns among those earning more or less than $50K (or perhaps more income brackets) across various education levels. My hypothesis about what the data would say goes something like this:

Relatively uneducated but above-median income white folks are hard-core for the GOP. These people not only vote their pocketbook, but also have nothing but disdain for pointy-headed intellectuals who use learning to put on airs. Sarah Palin is the apotheosis of this segment.

The highly educated white vote (college+) is likely to lean Democratic across all income levels, except in the highest income brackets (where, again, the pocketbook comes into play).

The third segment -- namely less educated (high school or less), low income voters -- is the most interesting. With this group, I'd guess that normally they vote their cultural prejudices, except during times of severe economic hardship, when, at the end of the day, they'd rather have a Democrat. This group is the key swing constituency.

I really think the dramatic and undeniable collapse of the deregulated financial system in September and October is what saved Obama's campaign. Remember that before Lehman Brothers collapsed on September 14, McCain had essentially caught up with Obama campaign by using Sarah Palin to rev up enthusiasm in that third segment.

What Lehman Brother's collapse (and the subsequent implosion of the stock market, the partial nationalization of the banking system, and the obvious oncoming trainwreck in the real economy) did, as Mark Danner so vividly described it was to "strike like a bolt of lightning, illuminating for all to see the ruins of the economic landscape." And with those ruins apparent -- and so evidently the result of a generation of failed GOP macroeconomic and deregulatory jihad -- all the Palin claptrap about bulldogs, moose, and pigs became just cheap talk, allowing Obama to coast to a broad victory.

Saturday, November 01, 2008

Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'

WASHINGTON, DC–Mere days from assuming the presidency and closing the door on eight years of Bill Clinton, president-elect George W. Bush assured the nation in a televised address Tuesday that "our long national nightmare of peace and prosperity is finally over."

"My fellow Americans," Bush said, "at long last, we have reached the end of the dark period in American history that will come to be known as the Clinton Era, eight long years characterized by unprecedented economic expansion, a sharp decrease in crime, and sustained peace overseas. The time has come to put all of that behind us."

Bush swore to do "everything in [his] power" to undo the damage wrought by Clinton's two terms in office, including selling off the national parks to developers, going into massive debt to develop expensive and impractical weapons technologies, and passing sweeping budget cuts that drive the mentally ill out of hospitals and onto the street.

During the 40-minute speech, Bush also promised to bring an end to the severe war drought that plagued the nation under Clinton, assuring citizens that the U.S. will engage in at least one Gulf War-level armed conflict in the next four years.

"You better believe we're going to mix it up with somebody at some point during my administration," said Bush, who plans a 250 percent boost in military spending. "Unlike my predecessor, I am fully committed to putting soldiers in battle situations. Otherwise, what is the point of even having a military?"

On the economic side, Bush vowed to bring back economic stagnation by implementing substantial tax cuts, which would lead to a recession, which would necessitate a tax hike, which would lead to a drop in consumer spending, which would lead to layoffs, which would deepen the recession even further.

Wall Street responded strongly to the Bush speech, with the Dow Jones industrial fluctuating wildly before closing at an 18-month low. The NASDAQ composite index, rattled by a gloomy outlook for tech stocks in 2001, also fell sharply, losing 4.4 percent of its total value between 3 p.m. and the closing bell.

Asked for comment about the cooling technology sector, Bush said: "That's hardly my area of expertise."

Turning to the subject of the environment, Bush said he will do whatever it takes to undo the tremendous damage not done by the Clinton Administration to the Arctic National Wildlife Refuge. He assured citizens that he will follow through on his campaign promise to open the 1.5 million acre refuge's coastal plain to oil drilling. As a sign of his commitment to bringing about a change in the environment, he pointed to his choice of Gale Norton for Secretary of the Interior. Norton, Bush noted, has "extensive experience" fighting environmental causes, working as a lobbyist for lead-paint manufacturers and as an attorney for loggers and miners, in addition to suing the EPA to overturn clean-air standards.

Bush had equally high praise for Attorney General nominee John Ashcroft, whom he praised as "a tireless champion in the battle to protect a woman's right to give birth."

"Soon, with John Ashcroft's help, we will move out of the Dark Ages and into a more enlightened time when a woman will be free to think long and hard before trying to fight her way past throngs of protesters blocking her entrance to an abortion clinic," Bush said. "We as a nation can look forward to lots and lots of babies."

Continued Bush: "John Ashcroft will be invaluable in healing the terrible wedge President Clinton drove between church and state."

The speech was met with overwhelming approval from Republican leaders.

"Finally, the horrific misrule of the Democrats has been brought to a close," House Majority Leader Dennis Hastert (R-IL) told reporters. "Under Bush, we can all look forward to military aggression, deregulation of dangerous, greedy industries, and the defunding of vital domestic social-service programs upon which millions depend. Mercifully, we can now say goodbye to the awful nightmare that was Clinton's America."

"For years, I tirelessly preached the message that Clinton must be stopped," conservative talk-radio host Rush Limbaugh said. "And yet, in 1996, the American public failed to heed my urgent warnings, re-electing Clinton despite the fact that the nation was prosperous and at peace under his regime. But now, thank God, that's all done with. Once again, we will enjoy mounting debt, jingoism, nuclear paranoia, mass deficit, and a massive military build-up."

An overwhelming 49.9 percent of Americans responded enthusiastically to the Bush speech.

"After eight years of relatively sane fiscal policy under the Democrats, we have reached a point where, just a few weeks ago, President Clinton said that the national debt could be paid off by as early as 2012," Rahway, NJ, machinist and father of three Bud Crandall said. "That's not the kind of world I want my children to grow up in."

"You have no idea what it's like to be black and enfranchised," said Marlon Hastings, one of thousands of Miami-Dade County residents whose votes were not counted in the 2000 presidential election. "George W. Bush understands the pain of enfranchisement, and ever since Election Day, he has fought tirelessly to make sure it never happens to my people again."

Bush concluded his speech on a note of healing and redemption.

"We as a people must stand united, banding together to tear this nation in two," Bush said. "Much work lies ahead of us: The gap between the rich and the poor may be wide, be there's much more widening left to do. We must squander our nation's hard-won budget surplus on tax breaks for the wealthiest 15 percent. And, on the foreign front, we must find an enemy and defeat it."

"The insanity is over," Bush said. "After a long, dark night of peace and stability, the sun is finally rising again over America. We look forward to a bright new dawn not seen since the glory days of my dad."